Question

In: Economics

Suppose a firm in a competitive market face the following costs and prices.

Suppose a firm in a competitive market face the following costs and prices. 

COSTS

REVENUES

Quantity
Produced

Total
Cost

Marginal
Cost

Quantity
Demanded


Price

Total
Revenue

Marginal
Revenue

0

$0

--

0

$80


--

1

$50


1

$80



2

$102


2

$80



3

$157


3

$80



4

$217


4

$80



5

$285


5

$80



6

$365


6

$80



7

$462


7

$80



8

$582


8

$80











  1. Complete the table.

  2. How much will the firm produce to maximize profit?

  3. What is the economic profit at the quantity produced to maximize profit?

Solutions

Expert Solution

A)

B) In a compettive market , profit will be maximized if P = MC , which as shown in the table is at 6 units

C) Economic profit = TR - TC at 6 unit

=480 - 365

= 115

Rahul Sunny answered 2 years ago
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